Summary
Eureka Forbes Limited - Q3 FY26 Earnings Call Summary Thursday, February 05, 2026 2:00 PM
Event Participants
Executives 2 Gaurav Khandelwal (CFO), Pratik Pota (MD & CEO)
Analysts 8 Achal Lohade, Aniruddha Joshi, Deepak Kumar, Keshav Lahoti, Mayur Parkeria, Parikshit Kabra, Priyansh Gopawat, Renu Baid, Siddhartha Bera
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹645.4 crores | +8% YoY; impacted by post-festive slowdown and elevated trade inventory in e-commerce. |
| Adjusted EBITDA Margin | 11.3% | +57 bps YoY; expansion driven by COGS optimization despite a 23.3% rise in A&SP. |
| Adjusted PBT | ₹60.0 crores | +11.3% YoY; adjusted for a one-time labor code charge of ₹40.4 crores. |
| Pre-exceptional PAT | ₹39.0 crores | +11.9% YoY; reported PAT was impacted by one-time exceptional labor code provision. |
| Gross Margin | 60.8% | +331 bps YoY; driven by institutionalized COGS program and favorable channel mix. |
| A&SP Spends | ₹38.6 crores | +23.3% YoY; increased investment in category awareness for Air and Robotics. |
| YTD Revenue (9M) | ₹2,026.6 crores | +11.1% YoY; business remains on a healthy double-digit growth trajectory. |
| YTD Adj. EBITDA Margin | 11.9% | +67 bps YoY; reflects consistent focus on profitable growth. |
Geographic & Segment Commentary
- Water Purifiers: Growth was softer in Q3 due to e-commerce channel inventory issues, but management reported market share gains both YoY and sequentially. Excluding e-commerce, the segment saw double-digit sell-out growth, supported by the new premium “Blaze” range and economy “Sure” products.
- Emerging Categories (Air & Robotics): Air Purifiers delivered a breakout performance, growing 3x YoY (on a low base) due to worsening air quality and a wider product range. Robotics continues its strong trajectory, now making up nearly two-thirds of the total vacuum cleaner portfolio.
- Service & Aftermarket: Recorded the third consecutive quarter of double-digit AMC booking growth. The company launched a new assortment of filters and spares to capture the unorganized aftermarket, with revenue impact expected from Q2 FY27.
Company-Specific & Strategic Commentary
- COGS Optimization: The institutionalized COGS program delivered significant gross margin expansion, creating headroom for growth investments in A&SP and service capability.
- Service Network Transformation: Achieved all-time high service KPIs, including 24-hour complaint resolution turnaround time, to drive higher Net Promoter Scores (NPS).
- Cost of Ownership: Management has reduced the 5-year total cost of ownership for water purifiers by 40-50% through economy models and 2-year long-life filters to drive mass penetration.
- Omnichannel Reset: Management identified a specific slowdown on one major e-commerce platform; inventory normalization is expected by the end of Q4 FY26.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Q4 FY26 Revenue | > 11.1% Growth | Expected to outperform YTD growth as channel inventories normalize. |
| FY30 Ambition | 2x Revenue / 3x EBITDA | Long-term target remains intact based on category tailwinds and multi-category levers. |
| Capex | ₹60 - ₹70 crores | Annualized run-rate for FY26 focused on IT and supply chain capabilities. |
| Gross Margins | Range-bound | Expectation to maintain current levels rather than sustain the 60.8% peak. |
Risks & Constraints
| Risk | Context |
|---|---|
| Channel Concentration | A slowdown in traffic on a single e-commerce platform disproportionately impacted Q3 sell-in, necessitating inventory corrections. |
| Consumer Sentiment | Post-festive demand was lower than anticipated, suggesting sensitivity to macro-level discretionary spending cycles. |
| Regulatory / Labor | A one-time ₹40.4 crore hit from new labor codes highlights potential regulatory cost impacts on the workforce-heavy service model. |
Q&A Highlights
Channel Inventory & Growth
- Question: Will Q4 return to double-digit growth after the Q3 “aberration”? (Keshav Lahoti)
- Answer: Q3 was a one-off due to post-festive e-commerce slowdown. Inventory is normalizing in offline channels and will do so in e-commerce by quarter-end. Q4 growth is expected to be ahead of the 9M average of 11.1% (Pratik Pota).
Margin Sustainability
- Question: Is the 60.8% gross margin sustainable? (Umang Mehta)
- Answer: We don’t expect to keep it at 61%, but will keep it range-bound. We choose to reinvest gross margin gains into A&SP or service to optimize for EBITDA (Gaurav Khandelwal).
Competitive Intensity
- Question: Are new aggressive players impacting market share? (Umang Mehta)
- Answer: No; Eureka Forbes gained share sequentially and YoY. New entrants impact smaller brands more than the leader (Pratik Pota).
Service Business Model
- Question: How does the AMC revenue/cost accounting work? (Priyansh Gopawat)
- Answer: We recognize the full acquisition cost upfront as a service charge, while revenue is recognized 1/12th per month. This can cause temporary margin disconnects during high-growth periods (Gaurav Khandelwal).
Key Takeaway
Eureka Forbes delivered a resilient Q3 FY26 despite a temporary slowdown in e-commerce, with revenue growing 8% and adjusted EBITDA margins expanding 57 bps to 11.3%. The quarter was characterized by a sharp divergence in channel performance; while one major e-commerce platform struggled with traffic, offline channels and emerging categories like Air Purifiers (3x growth) and Robotics remained strong. Management successfully utilized a COGS optimization program to expand gross margins to 60.8%, providing the financial flexibility to increase A&SP spends by 23.3%. Strategically, the company is pivoting from a water-only focus to a multi-category health-tech player while aggressively targeting the service aftermarket. With channel inventories normalizing and service KPIs at record highs, management remains confident in its “2x Revenue, 3x EBITDA” FY30 ambition and expects Q4 FY26 growth to trend above 11%.
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